Your Bank Deposits (and possibly your pension) are unsafe!!
Prior to me addressing the seriousness of the Eurozone debt situation and its consequences for Eurozone economies, I would like to start by pointing out (on a lighter more humorous tone) that the manner in which 'Germany's Eurozone' has dealt with the current situation reminds me of a Harry Enfield comical sketch of the methods of the Amsterdam Police's solution to deal with theft and prostitution - legalize them!!! It appears Germany has done a similar deed!! Legalized theft.
Firstly I should point out that the decision (I feel largely
made by Germany with their own agenda at hand) made by the Eurozone to Tax or
perhaps more appropriately seize 10-45% of Bank account assets in Cyprus has
opened up a door the Eurozone has no prospect of closing!
The ‘United States of Europe’ and its suprationalist bodies have
always prided the protection of Eurozone bank deposits and economic security of
its citizens. Well, as a result of complete desperation and outright bullying,
these principles have been abandoned altogether.
This raises a pertinent question for another discussion-what
impact will this have for potential investors outside of Europe and their view
of Europe as an investment.
The fact now presents itself in clear and esoteric format - Bank
deposits in European Banks and even Pensions are not safe! The Fact that the nationalizing of pensions
in Cyprus was considered as a solution to plugging their debt suggests all that
glistens in EUROPE and its glowing FTSE 100 at 6283 is indeed not GOLD!
It is in fact far from it. The solution to the Greek debt problem
was to print more debt by allowing Greece to sell Treasury notes with a very
high yield! I think we all agree the situation was not ideal but at least those
that ‘bought’ the debt knew the risks! Admittedly Greek national debt has gone
down by 12% from 2012-2013. The Eurozone response to the Cyprus bailout has been
nothing short of insane! Demanding the theft of bank deposits and cashpoint
withdrawal limits, temporary freezing of accounts! Is this what it takes to
hold Europe together?
The consequences of the Cyprus bailout terms will have dire
consequences for the Eurozone. Not only will more debt need to be created
through the sale of treasury notes –no doubt at a yield worryingly near to the
4% danger level, but personal assets of Cypriot citizens will be appropriated
/stolen by Angela Merkel-the wolf in sheep’s clothing!
Politicians and spin-doctors will spend the
forthcoming weeks reassuring European citizens that the Cypriot situation was a
unique one, but in reality this sets a precedent for Europe. Not only are
European bank assets (and possibly pensions if you take the discussions of
their nationalization seriously) unsafe, but its promises to protect EU
savings/deposits can be now be manipulated and even sidestepped for what euro
politicians term ‘the greater good’-of Europe of course! (In reality the greater
good of the bigger powers in Europe such as Germany).
That leads me to another point. Those who have an avid and
deep understanding of European politics will perhaps wonder why I have so far substituted
the term Supranationalist for Euro politicians. This is because I feel this
decision and new direction of Europe has actually been decided largely by
Germany and not the Supranationalist body of Europe as a whole! The ‘Good of
Europe’ in the whole was not the focal point of the EU meetings and
discussions. Germany has pushed and pushed that European solidarity is the only
answer but is doing it by feeding an increasingly poisonous and lethal pill of
austerity to weaker nations. I am sure I am not the only one starting to see
here that the supposed ‘European solidarity objective’ is now becoming (rather
swiftly) a chance for powerful Eurozone countries (mainly Germany here) to push
their own agenda and self-benefit! All this talk of illicit money transfers
into Cyprus, and it being responsible for sheltering Russian Mob money should
have been discussed before Cyprus entered Europe not simply when things go
wrong! Germany’s ‘ranting’ and pointing of its finger at Cyprus for having a
failing system is really a reference to the low corporation tax/income tax of
10%. We have heard this before with France and the UK pointing their finger at
Ireland for offering a 12.5% corporation tax as their reason for ‘failure’. In
reality Germany is using Cyprus as a way to steal Russian funds-frankly
stealing from an economy far more healthy and superior to theirs. Take a look
at Russia’s debt to GDP ratio of 8.2% compared to that of Germany’s 83%! (A lower
% indicates a country is able to repay its debt-a healthy figure is around 30%).
Compare the national debts of 2.7 trillion (Germany) to 171
billion(Russia) and it appears if anyone should be pointing fingers it should
be RUSSIA toward the direction of Germany, who seems to have used political
expediency and EUROPEAN SOLIDARITY as an excuse to steal funds from Wealthy
Russians! Germany’s argument that the funds are ‘dirty’ and that of mobsters
does not justify it. That would be like suggesting it is ok to steal from
someone if that person is a thief! Imagine the consequences of such a precedent.
Well, this is exactly what has just been created!
Fact-It is not the low
corporation tax or tax haven status here that is to blame. Tax havens have
always existed as part of both economic booms and recessions! The Blame should
be on a ludicrous attempt to unite an entire group of extremely economically
different nations!
Furthermore, are The UK, French and German economies really
in a position to be pointing fingers when their national debts stand at 1.7trillion
(UK) 1.8Trillion (France) 2.2 Trillion (Germany). All three countries hold
debt-GDP ratios far above/worse than the healthy level of 30% (the UK is a
dazzling 92%).
One must add that Cyprus and other weaker economies in
Europe have neither benefitted from Europe growth wise. Many have in fact seen
10 years of negative economic growth!!!!! Perhaps us being friends armed with
economic free trade agreements and the occasional exchange of information
agreements was enough. This ‘Eurozone Marriage’ is looking already like the
seeds for a nasty and bitter divorce!
E.g. take for example Norway and Switzerland. Although
clearly ‘friends of Europe’ trade wise and co-operate fully, they are not part
of the Eurozone or the EEA. They are by far the superior economies of Europe.
Clearly European friendship seems to have worked better here than marriage!
What once was viewed as a United States of Europe (perhaps
slightly socialist) which held common values and moral against such wrongs as
theft and human rights violations has turned into a situation that sounds like
something Saddam Hussein or Muammar al-Gaddafi would have thought up. I can indeed
imagine Saddam or Gaddafi stealing their people’s bank deposits for the
‘greater good’.
Those who read our
last article ‘gold the good, the bad and
the ugly’ would have noticed that shortly after we saw an increase in
volume of gold trading and the FTSE decrease in value. I think by now most
savvy investors and those who see there is a lot going on behind the scenes
have already invested heavily into Gold and/or other precious metals. Those
stubborn enough to maintain their belief in the paper currency debt financed
system frequently ask me where I see gold in 3-6months. Ok well rather than me
preaching like your stockbroker preaches his latest ETF or ‘fund’ that has been
put together by an old boys network of ‘Eton educated fellows’, I will present
you with the raw economic data (explained of course) that will enable you to
see things from an aerial perspective, and not the one the media wants you to
see for e.g.
The FTSE is undervalued BUY! The economy is well en route to
recovery!
As you will see below from viewing the graphs that
illustrate the price of gold since 2005 there is a very clear pattern that the
simplest of individual could spot - yet is being overlooked by many analysts at
the big banks who tend to favour debt and leverage over simple common sense!
When looking at the price of gold since 2005 one can clearly
see a 21-22 month cycle 4 times each time with it arriving strikingly near to
cue! (So near that it would jump up and bite you if it indeed had teeth)
The cycle
runs from spike to spike, resulting in four peaks on the following dates as per
the London PM FIX.
May 12th,
2006 (at $725 an ounce)
March 17th,
2008 (at $1,011.25 an ounce)
December 2nd,
2009 (at $1,212.50 an ounce)
September 6th,
2011 (at $1,895 an ounce)
Do you see
clearly now the rain has gone? Clearly there is a pattern in the spacing from
peak to peak! They are 22, 21, and 21 months apart; right on cue, as indicated
on the following graph of the SPDR Gold Trust ETF (NYSE: GLD):
Of course, there are noticeably secondary price peaks all
the way up-nothing goes up in a straight line, but these above are by far the
most prominent and are consequently followed by the most severe corrections.
If the above data is anything more than a co-incidence-then
logic would suggest we repeat the pattern. I.E count 21-22 months from the last
peak of September 2011, this takes us to June 2013!!
Furthermore, the graph clearly illustrates that each
consecutive peak is higher than the last, leading me to suggest the next peak
in June to be higher than the $1,895 PM fixed high of 2011!
If we actually dig deeper, and dig deeper we shall, yet more
patterns emerge that further indicate evidence of a bull rally for my favourite
yellow metal!
If we take a
look at the time it took for these new peaks to begin mounting their final leg
to each top we see another pattern.
Below, the graph illustrates, each of the four peaks (in red) had a
running start ranging from two to five months prior (in green).
Source: BigChart.com
Well, we
earlier mustered up the nerve or perhaps curiosity to count 21 months forward
to arrive at June, 2013 for the next peak. Why not go all the way and count back
two to five months from there
If this
cycle repeats itself for a fifth consecutive time, the next spike up in gold
should begin no later than this coming April, and possibly as soon as any day
now. This trend will continue and Gold will continue to increase in value
despite the mathematically certain eventual collapse of the USD. The question
is, at what price are you going to get involved in the only real protection
against collapse - PHYSICAL GOLD.
By Simon J Thomas LL.B (Hons)
Head of Research/Trading Analysis
PM Trading (Europe) Ltd.
T: +44
203 137 2691
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